The Economic Efficiency and Pollution Prevention Act of 1996 – Testimony

David Morris’ testimony before legislative committee hearing in Minnesota on a 1996 bill, H.F. 3063, the Economic Efficiency and Pollution Reduction Act of 1996 (EEPRA).

This bill ventures into new territory for the state of Minnesota.  Yet it also reflects a growing body of opinion locally, nationally and internationally that our tax systems need to be restructured so that they take into account not only the needs of the present generation but the needs of future generations.

There are two principles underlying this bill.  One is that when we tax something we raise its cost.  When we raise its cost we use less of it.  Currently we tend to overtax activities we would like to encourage, so called “goods” like investment and work and property.  And we tend to undertax activities we would like to discourage, so called “bads” like inefficiency and pollution and the depletion of natural resources.

Thus our tax system has a built-in efficiency.  This bill tries to correct that problem.  And in so doing, it raises the cost of inefficiency and pollution and lowers the cost of work and investment and property.

There is another principle at work in this bill.  A market economy works most effectively if the consumers can rely on accurate price signals.  The price we pay for many of our goods does not reflect their real environmental and social cost.  This is especially true for fossil fuels.  This bill begins to internalize some of the real environmental costs into the price we pay for fossil fuels.

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.